Cannon Lincoln, an American- owned company, launched Oasis Plus as an option on its personal pension plans in January 1991. But last March the Revenue wrote to the company to say that the tax privileges of a pension scheme were not appropriate for schemes involving 'insurance cover'. 'Pension arrangements are given solely with the object of encouraging people to provide for an income in retirement,' it said in a letter.
The Revenue is not pursuing the 10 people who have chosen the option, and says it will allow the 15,000 people who have bought Cannon Lincoln pensions since 1991 to retain the right to choose that option. But no new policies can be sold.
Kevan Ward, pensions marketing manager at Cannon Lincoln, said he believed the Revenue reviewed the scheme after the reinsurers proposed a similar option on an occupational pension scheme. This could have breached the rule that company pensions must not exceed two thirds of final salary.
Anyone who chose Oasis Plus on retirement had to sacrifice 10 per cent of their initial pension payment. To get a pension that rises 5 per cent a year you must give up 35 to 40 per cent of initial payments.
If a doctor certifies that the pensioner can no longer cope with daily living unaided the uprating is triggered. The amount depended on retirement age.
So a man retiring at 60 with a pounds 5,000 pension would get an initial pension of pounds 4,500 a year. If he is overtaken by infirmity the pension jumps to pounds 13,500 after a three-month delay. The uprating comes to all on their 85th birthday.
Mr Ward said the decision seemed unfair as pensions included elements of insurance - life insurance, and the payment of premiums for those unable to work. It also seemed out of step with government policy to encourage people to take more responsibility for their old age.Reuse content